Director loan as deposit

Uncle_Ted

Does anyone know of any mainstream mortgage lenders that accept a directors loan as deposit? I'm looking to use a directors loan to fund the deposit while I wait to sell my existing house.

[Deleted User]

Its actually not that difficult, most of the high street will be ok with this. HSBC, Nationwide, Virgin, Santander, Barclays are just examples to show that its not a big issue for a lot of lenders.

You may struggle more with the retained property though as some will kill affordability for 2nd homes, some wont do it at all on the assumption you are using them for short term lending with the intention to repay most of the debt as soon as the property sells.

Thrugelmir

Uncle_Ted wrote: »

Does anyone know of any mainstream mortgage lenders that accept a directors loan as deposit? I'm looking to use a directors loan to fund the deposit while I wait to sell my existing house.

You are aware that there might be tax implications in doing so.

sal_III

Thrugelmir wrote: »

You are aware that there might be tax implications in doing so.

I wouldn't do it for that reason alone, unless very desperate. It will be bloody expensive (unless less than £10k for less than 9m)

amnblog

Let's not get confused here.

A dividend is income and although its use as a deposit might cause Lenders to discount the same income for affordability - that works.

A directors loan from the Firm is a loan to the borrower and Lenders do not like deposit funds being borrowed.

Also, Thrug's post carries some weight here as I understand a Directors Loan unpaid at year end can be liable to 32.5% Corporation tax and a Directors Loan can also be considered a P11D benefit attracting Personal Tax and Employers NI.

[Deleted User]

amnblog wrote: »

A directors loan from the Firm is a loan to the borrower and Lenders do not like deposit funds being borrowed.

There is presumably a difference between a directors loan and an unsecured loan from a deposit stand point. I can think of only 1 or 2 lenders that take unsecured loans for deposit but there seems to be quite a lot for directors loans.

An example for Nationwide:

Unacceptable source of deposit
Any loans taken out by your client, except for:
borrowing from another lender against an additional property owned by the applicant (subject to affordability and criteria)
the repayment of a Limited Company Directors Loan. The Limited Company accountants must confirm the monies are available and there is no detriment to the company by removal of the funds. This deposit must also be keyed as savings.
Loan from a UK Trust Fund, provided no monthly repayment is made and the only condition attached to the Trust Fund loan is that it is repayable on sale of the property. Any other form of loan from a Trust Fund is unacceptable.
Non-UK Trust Funds
Funding from overseas companies
Gifts from overseas companies
Funding from credit cards
Repayment of a loan from a third party
Bitcoins

Any idea why they would be viewed in a different way than other borrowing?

amnblog

This Nationwide Criteria refers to the repayment of a Directors Loan made to the company.

Our poster I believe is referring to taking a loan from the company.